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Hindalco Discussion
Mission &
Vision
Strategy
Formulation
Internal
Analysis
Macro
Environment
Industry
Analysis
Risks &
Opportunities
Analysis
Macro Analysis
Country
Competitiveness
Analysis
Environmental
Analysis
Region
Micro Analysis
Industry Analysis
It captures the
competition.
Porters video
key
elements
of
industry
Suppliers
Power of
Bargaining
Threat of
substitute
Industry
Rivalry
Threat of
new
Entrants
Buyers
power of
Bargaining
Suppliers
Power of
Bargaining
Threat of
substitute
Industry
Rivalry
Threat of
new
Entrants
Buyers
power of
Bargaining
Entry Barriers
Economies of scale
Product Differentiation
Capital requirements
Switching costs
Access to distribution channels
Absolute advantages
Expected retaliation
Economies of Scale:
Decline in unit cost of a product as the absolute volume per period
increases
Deter entry by forcing the entrant to come in at large scale
Examples: Automobile (Maruti 800)
Entire Functional Area or Particular Operations
Diversification into the related area
Capital Requirements
Large Financial Resources requirement
Capital in terms of Production Facilities, Customer credit, Inventories, or
covering start-up losses
Examples: Oil & Gas industry
Differentiation:
Brand Identification and Customer Loyalties
Basis of Past Advertising, Customer Service, Product Differences or being
first into Industry
Entrants to spend heavily to overcome existing customer Loyalties
Example: Mineral Water market (Bisleri)
Switching cost:
One time costs facing the buyer of switching from one suppliers product
to another
Example: Telecom industry in the US
Absolute Advantages
Suppliers
Power of
Bargaining
Threat of
substitute
Industry
Rivalry
Threat of
new
Entrants
Buyers
power of
Bargaining
Diverse Competitors:
Diversity in goals lead to different strategies for competing
No set of Rules of the Game
Specialized Assets
Fixed Costs of Exit
Strategic Interrelationships
Emotional Barriers
Government & Social Restrictions
Suppliers
Power of
Bargaining
Threat of
substitute
Industry
Rivalry
Threat of
new
Entrants
Buyers
power of
Bargaining
Substitute Products:
Are Subject to trends improving the Price Performance Trade Off with
Industrys Product
Are produced by Industries earning high Profits
Suppliers
Power of
Bargaining
Threat of
substitute
Industry
Rivalry
Threat of
new
Entrants
Buyers
power of
Bargaining
Suppliers
Power of
Bargaining
Threat of
substitute
Industry
Rivalry
Threat of
new
Entrants
Buyers
power of
Bargaining
Positioning:
For the positioning your company within the industry
Helps answer questions like: why are prices low/high? Can we reduce input
costs?
Helps you locate where industry forces are weaker, and build a compelling
offering for that space
Today & tomorrow
Final Analysis
Rate the overall attractiveness of the industry high/medium/low
Repeatedly ask yourself what-if seek out different hypothetical positions
to see if they fit with your companys needs and capabilities
Make the final decision market entry / exit /investment / integration